Medicare private plans project premium rise in 2014

Patients enrolled in Medicare Advantage may see their benefits cut and higher premiums if the Centers for Medicare & Medicaid Services reduces payments to the private plans as planned in 2014.

The consultant Oliver Wyman, commissioned by America’s Health Insurance Plans, prepared an analysis of a 2.3% cut in pay to the private insurance plans for seniors as well as new taxes on plans required by the Affordable Care Act. Estimates indicate that premiums will rise an average of $50 to $90 a month for Medicare Advantage beneficiaries.

“The proposed changes to Medicare Advantage payments are a crushing blow to the millions of seniors and people with disabilities who count on this critically important part of Medicare,” said AHIP President and CEO Karen Ignagni.

More than 14 million seniors, or roughly 28% of Medicare beneficiaries, obtain coverage through the Medicare Advantage program. The health system reform law sought to lower payments to the plans to offset coverage expansion provisions that begin in 2014. The Congressional Budget Office has projected that there will be about 3 million fewer seniors who will have the private insurance as a result.

The Obama administration is committed to improving Medicare Advantage, which remains a popular option with seniors, said Jonathan Blum, CMS deputy administrator and director of the agency’s Center for Medicare, during a Feb. 28 Senate Finance Committee hearing. Access to Medicare Advantage remains high, as there is an average of 26 plan options in each county and premiums have fallen 10% since the health system reform law was enacted in 2010, he said.